The Time is Right for Professional Web-Based Tax Prep

From the July 2009 Issue

For all the recent talk and hype about Web 2.0 and cloud computing, Software-as-a-Service (SaaS) has yet to really bloom in one of the most important areas of all for tax and accounting professionals. Where is professional-level online tax prep?

Yes, there are a few options on the market, most notably the web-only GoSystem from Thomson Reuters and Orange Door Pro, and also a hosted version of UltraTax CS through Thomson Reuters' Virtual Office CS. But none of these web-based systems have yet achieved a significant market share.

And there are a handful of others that try to market their self-filer programs to professionals, but have not really designed the system for professional use. One that comes to mind has no real client directory list, communication templates, billing functions or research options, and even uses the same terminology as for self-filers (Such as, “Did you receive any wages this year?”). While these systems might be able to handle simple 1040s and even a few 1065s and 1120s, they simply aren’t capable of managing more complex client returns and firm workflow processes.

But as willing as individual taxpayers have been to file online (the IRS lists about 20 online tax programs geared for self-filers), professionals haven’t made the jump to online tax programs in large numbers. This is because of several factors, including the lack of professional-level products for small and mid-sized practices, a previous lack of faith in online security and concerns about having to learn a new system.

THE FEAR OF THE NEW
This last factor is probably the most significant. About 90 to 95 percent of professionals stay with the same tax package year after year. Are they thrilled with everything about their tax system? Are you 100 percent satisfied with yours? Odds are that you’re not, but the perceived disruption of learning a new system is enough to dissuade most firms from changing.

This fear could be greatly diminished if the tax software vendors who currently control most of the market offered online/SaaS versions of their traditional programs. These vendors are Intuit (Lacerte and ProSeries), CCH (ProSystem fx Tax, ATX and TaxWise), Thomson Reuters (UltraTax CS and GoSystem), and Drake Software (Drake Tax). The GoSystem product is a hosted program, but it is geared toward high-end firms, with extensive collaboration tools and research integration, and a price point that’s fairly steep for most small and mid-sized practices. I’m sure that Thomson Reuters would point out that firms can select only the options they need and trim the cost down a bit, but even without the extra options it is still a Rolls Royce.

CLIENT DATA SECURITY
Professionals are justly concerned about the security of their client data. It is their livelihood, after all, and negligence could open them up to legal consequences and even the loss of their practice. But I believe most professionals have overcome at least most of their concerns about the security of data when it is used through an online program.

Yes, there are threats, but there is a greater threat to your client’s data when it is hosted on your own servers or on your own office PCs. Fire, weather events, theft, system crashes, unauthorized users, etc., all are much more likely to affect your office computers than they are secure hosting facilities. These facilities, with high-level technological and human security measures, also automatically back up data at multiple locations around the country, which virtually eliminates the possibility that it will be lost due to any disaster or computer glitch, meaning you can get back up and running even if your office experiences problems. You can’t say that about your computer if it crashes on April 1.